Suppose you are trying to price a bond. Which of the following is TRUE?

Question 39 options:

All else the same, bonds with higher coupon payments are generally less sensitive to changes in interest rates than bonds with lower coupon payments

All else the same, when market interest rates rise, bond prices will rise as well.

All else the same, bonds with longer maturities are generally less sensitive to changes in interest rates than bonds with shorter maturities.

All else the same, yields on bonds are always lower than the coupon rate.

None of the above

Which of the following is not true about diversification?

Question 32 options:

Diversification can substantially reduce the variability of returns without an equivalent reduction in expected returns.

There is usually a minimum level of risk that cannot be diversified away due to systematic risks.

We must have a negative correlation between two stocks in a portfolio in order to have diversification effect.

The less the correlation, the greater the diversification effect, the lower the portfolio risk compared with weighted risk of individual securities.

None of the above

Given a lump sum in the future, the more frequent the compounding the

Question 35 options:

greater the present value.

greater the effective annual interest rate.

greater the future value.

lesser the future value.

None of the above

Which one of the following statements concerning market efficiency is correct?

Question 11 options:

	Investors will generally receive a fair price when they sell shares of stock.
	New information will gradually be reflected in a stock's price to avoid any sudden change in the price of the stock.
	In a strong-form efficient market, some market participants will have an advantage over others.
	Real asset that are infrequently bought and sold (e.g., real estate, timber) are more efficient than financial assets (e.g. stock, bonds) that are heavily traded.
	None of the above.